Like other organs, developing hair follicles arise via a precisely-orchestrated series of secreted signals traveling between epithelial hair follicle progenitors and an adjacent mesenchymal condensate, which together ultimately generate a mature, hair-producing follicle. After birth, the follicle repeatedly cycles through periods of growth, regression, and rest, making it a unique model for studying organogenesis in postnatal life. Work from our lab and others has established that secreted Sonic hedgehog (Shh), which is produced by follicle epithelium and signals to both epithelial and mesenchymal follicle progenitors, is an indispensable regulator of embryonic hair follicle growth, but not differentiation. We have shown that the primary target for Shh in developing hair follicles is the epithelium, and that the proliferative response to Shh is mediated by the transcription factor GH2. We have also found that the Hedgehog (Hh) pathway is involved in the formation of oil-producing sebaceous glands, and that focal activation of Hh signaling is sufficient to drive epithelial bud development, a process previously shown to be controlled by Wnt signals. We hypothesize that epithelial Hh signaling can initiate epithelial bud formation in the absence of a mesenchymal signal, and that the Hh pathway normally drives cell proliferation during periods of active follicle growth after birth. In addition, we propose that Hh signaling has a crucial function in sebocyte development. To test these hypotheses, we have developed conditional mouse models that enable precise spatial and temporal control of Hh signaling activity. These models will be used to: 1) ascertain whether Hh signaling stimulates growth of follicle epithelium by acting directly on stem cells, their progeny, or both;2) determine the precise function of Hh signaling in sebaceous gland development and maintenance;and 3) explore the mechanism by which ectopic, focal activation of Hh signaling leads to formation of epithelial buds. Given the widespread importance of Hh signaling in embryogenesis and cancer development, our findings in the hair follicle are likely to facilitate understanding of physiologic and pathologic Hh signaling in a variety of other organs.